Register your security interest or face the consequences : Re Holdco Pty Ltd (Administrators Appointed) (No 2)

Section 12(2)(d) of the Personal Property Securities Act 2009 (Cth) (PPSA) effectively “converts” any conditional sale agreement (including an agreement to sell subject to retention of title) into a security interest for the purposes of the PPSA. Thus a so-called “Romalpa Clause”1 will potentially give rise to a security interest through the alchemy of “substance over form”2 which lies at the core of the PPSA. Does this general rule apply to the conditional sale of intellectual property? For example, is a copyright (or software) covered by the PPSA? The recent case of Re Holdco Pty Ltd (Administrators Appointed) (No 2)3 (Holdco No 2) confirmed that s 12(2)(d) does indeed apply to a conditional sale of copyright and, furthermore, that the section is not limited to tangible goods.

This section will consider the arguments advanced (and rejected) in Holdco, as well as the iron-clad rule of the security cosmos: that registration of a security interest is of prime and sometimes singular importance.4